Ohio landlords and tenants often forget to comply with the legal requirements regarding multiple year leases. The Ohio Statute of Conveyances requires that all leases of three years or longer be both signed and notarized to be valid. The statute does, however, exempt leases not exceeding three years from these requirements. In other words, if a lease is for exactly three years or less, it does not have to be notarized.
If a lease of over three years is not notarized and the parties end up disputing its terms, a court will deem the lease “defectively executed.” Depending on the particular circumstances, the court will either invalidate the entire agreement, or require the parties to comply with some of the terms. Generally, if the tenant was in possession of the premises, and paying rent, then the parties created an implied tenancy. This implied tenancy is subject to all of the terms of the defective, except for duration. Instead, the duration will be based on the payment terms in the invalid lease so that if the tenant pays on a monthly basis, a month-to-month tenancy is created.
For example, in Burger v. Buck, the court declared a 15-year lease invalid because it had not been notarized. As the lease provided for a monthly rent payment, the court concluded that the lease became a month-to-month tenancy. Also note that a lease that does not comply with the requirements is not valid for any part of the duration. In other words, a 15 year lease which is not notarized is not even valid for the first year of the term.
Automatic extensions are included in the lease term for purposes of determining whether the lease must be notarized. Even if the initial term is less than 3 years, if an automatic extension provides that the lease term will exceed 3 years, it must be notarized. For example, a lease with a primary term of one-year plus automatic, indefinite one-year extensions places the lease beyond the 3 year limit. See here.
In addition, options to extend are added to the initial term of a lease in order to determine the length of the lease. Thus, if a lease has an initial term of one-year but also includes a four-year option to renew, then the lease will be considered a five-year lease and must be notarized and signed.
Further, lease modifications may also require notary acknowledgment. In Ohio, where a modification to a lease alters the fundamental possessory interests of the parties, it constitutes a conveyance of an interest in real property and must be notarized. A fundamental possessory interest includes interests such as the physical space of the leased premises or the duration of the lease, but does not include interests such as heating or air conditioning. For example, if a lease originally provides for a month-to-month tenancy, but then the parties agree to change it to a term of years, this modification must be notarized. See here.
In sum, be sure to have all leases for terms of over three years signed and notarized. And as always, be sure all of your leases comply with the Statute of Frauds.